Secp on Insurance Industry in Pakistan

Topics: Insurance, Corporate governance, Economics Pages: 25 (7812 words) Published: April 17, 2011
Official Newsletter of SECP

Securities and Exchange Commission of Pakistan

The development of modern and efficient corporate sector and capital market, based on sound regulatory principles, that provide impetus for high economic growth and foster social harmony in the Country.


November 2008 Autumn Edition
Volume VIII, Issue VI

The Chairman says... Editorial

Page 2

Insurance Industry
of Pakistan
Development, Achievements & Initiatives
he insurance sector, until end-2000, was under the regulatory purview of the Federal Ministry of Commerce. During that period, the private sector insurance industry was fragmented and suffered from operational inefficiencies, lack of professionalism and low unacceptable ethical standards, while the public sector insurance companies enjoyed their privileged status and captive business. During the regulatory regime of the obsolete Insurance Act, 1938, the insurance industry was infested with various issues. Capital adequacy requirements for general insurance companies were grossly inadequate, registration/supervision fees for insurers were modest, and the statutory solvency margins were based on outdated principles. A new insurance law was introduced in 2000 when the Insurance Act, 1938 was replaced with the Insurance Ordinance, 2000. The new law primarily aimed to ensure the protection of insurance policyholders’ interest and to promote sound development of the insurance industry. In the year 2001, the regulatory/supervisory responsibilities of the insurance sector were shifted from the Ministry of Commerce to SECP. Though the insurance industry in Pakistan is highly under-developed relative to its potential, it has shown a promising growth in premiums over past few years, as shown in the table below:

Page 3

Corporate Growth October 2008

Page 3


An Interview with ED HR&TD Mr. Mansur Ahsan
Page 5

News Flash from October 2008
Page 6

Corporate Change and Modern Technology
Page 7

Liquidity Crunch and the Monetary Policy
Page 9

Page 10


Events A Month in Business History Humor Birthdays Horoscope Obituary

%Inc Life Non-Life Combined 18,552 27.2 27,733 25.6 46,285 26.2

Figures in Million of Pak Rupee 2006 2007 %Inc %Inc 22,574 21.7 33,615 21.2 56,189 21.4 27,694 22.7 37,830 12.5 65,524 16.6

As on June 30, 2008, 47 insurance/takaful companies were transacting business, out of which 40 (including 3 general takaful, the National Insurance Company Limited and the Pakistan Reinsurance Company Limited) and 7 (including 2 family takaful and the State Life Insurance Corporation of Pakistan) belong to non-life and life sectors, respectively. SECP has a strategic priority and commitment to strengthen and maintain an effective regulatory environment in which insurance and takaful business can flourish and prosper. To strengthen SECP’s role as an effective facilitator for sound development of continued on page 4

Chairman says...
Corporate governance is one of the key elements in improving economic efficiency and growth. It serves as a deterrent to mismanagement and infuses discipline in the decision making process of boards of directors, be it a listed company, a private limited company or a public sector corporation. Good corporate governance encourages companies and those who own and manage them to achieve their corporate aims through more efficient use of resources. Good governance is vital for the development of a healthy and competitive corporate sector. A strong corporate sector boosts sustained and shared economic growth, i.e. growth that can withstand economic shocks and benefit all. Countries can, therefore, benefit immensely from corporate governance framework as a tool to redress factors leading to sagging economic activity. While ensuring good corporate governance practices in corporates has been an area of focus for SECP, we are also looking to engender good governance practices in all...
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